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Hexcel Reports 2011 Fourth Quarter And Full Year Results

(b) Non-operating expense for year ended December 31, 2011 is the accelerated amortization of deferred financing costs and expensing of the call premium from redeeming $150 million of 6.75% senior subordinated notes. The $6.8 million non-operating expense in the full year 2010 reflects the accelerated amortization of deferred financing costs as a result of the refinancing of our Senior Secured Credit Facility.

(c) The quarter ended December 31, 2011 includes a $5.8 million benefit primarily from the reversal of valuation allowances against net operating loss and foreign tax credit carryforwards. The year ended December 31, 2011 also includes a tax benefit from the release of $5.5 million of reserves primarily for uncertain tax positions as a result of an audit settlement. The quarter ended December 31, 2010 includes a $2.9 million benefit from the reversal of valuation allowances against U.S. deferred tax assets. The year ended December 31, 2010 also includes a $3.5 million benefit from New Clean Energy Manufacturing Tax Credits awarded in January 2010 for qualifying capital investments made in our U.S. wind energy facility in 2009.
Hexcel Corporation and Subsidiaries

Condensed Consolidated Balance Sheets

 

Unaudited

(In millions)
   

December 31, 2011
   

December 31, 2010
Assets  
Current assets:
Cash and cash equivalents $ 49.5 $ 117.2
Accounts receivable, net 199.3 173.9
Inventories, net 215.7 169.9
Prepaid expenses and other current assets     59.8       36.7  
Total current assets 524.3 497.7
 
Property, plant and equipment 1,223.5 1,063.9
Less accumulated depreciation     (501.4 )     (465.6 )
Property, plant and equipment, net 722.1 598.3
 
Goodwill and other intangible assets, net 57.4 56.2
Investments in affiliated companies 21.7 19.9
Deferred tax assets 33.0 63.6
Other assets     17.6       22.4  
Total assets   $ 1,376.1     $ 1,258.1  
 
Liabilities and Stockholders' Equity
Current liabilities:
Notes payable and current maturities of capital lease obligations $ 12.6 $ 27.6
Accounts payable 141.7 83.0
Accrued liabilities     93.2       95.3  
Total current liabilities 247.5 205.9
 
Long-term notes payable and capital lease obligations 238.3 304.6
Other non-current liabilities     88.1       88.2  
Total liabilities 573.9 598.7
 
Stockholders' equity:
Common stock, $0.01 par value, 200.0 shares authorized, 101.0 shares issued at December 31, 2011 and 99.5 shares issued at December 31, 2010 1.0 1.0
Additional paid-in capital 589.2 552.3
Retained earnings 283.9 148.4
Accumulated other comprehensive loss     (39.8 )     (15.1 )
834.3 686.6
Less – Treasury stock, at cost, 2.2 shares at December 31, 2011 2010, respectively     (32.1 )     (27.2 )
Total stockholders' equity     802.2       659.4  
Total liabilities and stockholders' equity   $ 1,376.1     $ 1,258.1  
Hexcel Corporation and Subsidiaries
Condensed Consolidated Statements of Cash Flows
  Unaudited

Year to Date Ended December 31,
(In millions)   2011   2010
 
Cash flows from operating activities
Net income $ 135.5 $ 77.4
 
Reconciliation to net cash provided by operating activities:
Depreciation and amortization 55.3 53.2
Amortization of debt discount and deferred financing costs and call premium expense 7.1 10.3
Deferred income taxes 23.4 16.1
Equity in earnings from affiliated companies (1.6 ) (0.5 )
Share-based compensation 13.9 12.4
Pension curtailment gain (5.7 )
Excess tax benefits on share-based compensation (8.5 ) (2.3 )
 
Changes in assets and liabilities:
Increase in accounts receivable (28.2 ) (22.5 )
Increase in inventories (48.8 ) (16.7 )
Increase in prepaid expenses and other current assets (1.1 ) (0.2 )
Increase in accounts payable/accrued liabilities 34.1 4.5
Other – net     (4.9 )     (5.2 )
Net cash provided by operating activities (a)     170.5       126.5  
 
Cash flows from investing activities
Capital expenditures and deposits for capital purchases (b) (158.0 ) (48.8 )
Settlement of foreign currency hedge     (5.2 )      
Net cash used in investing activities     (163.2 )     (48.8 )
 
Cash flows from financing activities
Borrowings from senior secured credit facility 135.0
Repayment of 6.75% senior subordinated notes (151.5 )
Repayment of senior secured credit facility (57.0 )
Repayment of senior secured credit facility – term loan (5.0 ) (2.5 )
Call premium payment for 6.75% senior subordinated notes (3.4 )
(Repayments) borrowings from credit line (2.3 ) 3.9
Repayments of capital lease obligations and other debt, net (0.7 ) (0.5 )
Borrowings from senior secured credit facility – new and former term B loan 100.0
Repayment of senior secured credit facility – former term loans (164.1 )
Issuance costs related to new Senior Secured Credit Facility (5.1 )
Activity under stock plans     10.5       3.1  
Net cash used in financing activities     (74.4 )     (65.2 )
 
Effect of exchange rate changes on cash and cash equivalents     (0.6 )     (5.4 )
Net (decrease) increase in cash and cash equivalents (67.7 ) 7.1
Cash and cash equivalents at beginning of period     117.2       110.1  
Cash and cash equivalents at end of period   $ 49.5     $ 117.2  
 
Supplemental Data:
Free cash flow (a)+(b) $ 12.5 $ 77.7
Cash interest paid 15.5 23.5
Cash taxes paid (refunded) 10.2 (1.5 )
Accrual basis additions to property, plant and equipment $ 184.5 $ 60.7
Hexcel Corporation and Subsidiaries
Net Sales to Third-Party Customers by Market Segment
Quarters Ended December 31, 2011 and 2010   (Unaudited)   Table A
(In millions)   As Reported   Constant Currency (a)
Market Segment     2011     2010   B/(W) %    

FX Effect (b)
    2010  

B/(W) %
Commercial Aerospace   $ 210.7   $ 174.1   21.0   $ (0.4)   $ 173.7   21.3
Space & Defense 77.1 84.2 (8.4) (0.2) 84.0 (8.2)
Industrial     67.5     52.7   28.1     0.1     52.8   27.8
Consolidated Total   $ 355.3   $ 311.0   14.2   $ (0.5)   $ 310.5   14.4
Consolidated % of Net Sales     %     %               %    
Commercial Aerospace 59.3 56.0 55.9
Space & Defense 21.7 27.1 27.1
Industrial     19.0     16.9               17.0    
Consolidated Total     100.0     100.0               100.0    
Years Ended December 31, 2011 and 2010   (Unaudited) Table A
(In millions)   As Reported   Constant Currency (a)
Market Segment     2011     2010   B/(W) %    

FX Effect (b)
    2010  

B/(W) %
Commercial Aerospace   $ 823.5   $ 644.7   27.7   $ 3.1 $ 647.8   27.1
Space & Defense 319.4 310.5 2.9 2.7 313.2 2.0
Industrial     249.5     218.4   14.2     9.6     228.0   9.4
Consolidated Total   $ 1,392.4   $ 1,173.6   18.6   $ 15.4   $ 1,189.0   17.1
Consolidated % of Net Sales     %     %               %    
Commercial Aerospace 59.2 54.9 54.5
Space & Defense 22.9 26.5 26.3
Industrial     17.9     18.6               19.2    
Consolidated Total     100.0     100.0               100.0    

(a) To assist in the analysis of our net sales trend, total net sales and sales by market for the quarter and year ended December 31, 2010 have been estimated using the same U.S. dollar, British pound and Euro exchange rates as applied for the respective period in 2011 and are referred to as “constant currency” sales.

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